Noam Chomsky – Startup Culture (2015) [video]
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"Narrow" given there is a vast global economy in need of hard engineering innovations - agriculture, mining, construction, energy, chemicals, biotech, manufacturing, machinery, vehicles, aerospace, science/discovery, environment/planet, telecomm, computer hardware, robotics. On the other hand apps, marketplaces, SaaS, AI, blockchain, RPA, most of the world doesn't really care about it and perhaps they shouldn't...
I think he makes a very important point about the role of the state. These hardcore engineering innovations and definitely cool and are interesting problems to work on, but I don't think the economics of it work out for startup companies given the amount of R&D it requires and probably lack of clear path of monetization. It reminds me of a fact I recently saw, the largest patent holder in China isn't Huawei or Tencent or any of the large tech companies, its the State National Grid or something like that, a state entity.
That being said, I don't think its necessarily good or bad, its just the way the ecosystem works. Even with the hard engineering innovations, in my opinion oftentimes the application/monetization of it into the form of a working product is still non-trivial, and that's the value captured by startups, so both are necessary in my view
Are you not referring to the “market” ecosystem?
You are flipping my lid, because in the earlier paragraph I read your comment about the largest patent holder in China being the state.
Is the conclusion not: the government of China funds R&D for those projects which the market is not an effective driver, but the project is determined to be important to the government (ideally, ‘the people’)
That sounds like what government is nominally intended to do. If that’s not the case in the US, and our best and brightest are maximizing hamburger delivery apps—-hot, fresh, cheap and profitable for all—-is this not a patently bad thing?
Unfortunately winner-takes-all seems to be the dominant Internet business model, whether that's due to nefarious monopolistic actions on the part of the big players or just the natural course given the underlying technology and economics.
Peloton hasn't really solved any social problem. The bike works just as well for burning calories as any other, what they managed to accomplish is sell people licenses for something they used to own at twice the price with a subscription on top and make them feel good about themselves instead of feeling like they're being robbed. That's the real innovation.
Uber hasn't solved any material transportation problem either. We're not suddenly able to 10x our urban transport capacity because of it. Probably the opposite, if anything it's induced congestion and draws resources from the modes of transport that actually solve those problems. The innovation here is that it's managed to do this while pretending not to be an employer.
I wholeheartedly agree the system wasn't great in many cities before Uber, but it's just a sleek version of what was obvious at the time--it just hadn't been built and the incentives weren't there.
I think you can look at bus/train systems as a comparison. In many cities you can download their app, set a destination, and it shows you what tickets you need to buy. You wave your phone to prove you bought your ticket. In many cities you can see the actual buses live on a map. Many bus stops show when the next bus arrives live. Uber was founded in 2009 and iPhone released in 2007. Google Maps was released in 2005, added traffic info in 2007, and Google Maps shipped with the first iPhone. It wasn't hard to see these pieces coming together--it just needed a lot of work, coordination, and a few generations of hardware and software improvements.
I do think they were the first and were innovative in a lot of aspects. I think their impact on the business of taxiing is way more "innovative" than the app and tech--but innovative doesn't necessarily mean "good" or a great use of resources.
As I said, if you had to regularly use cabs prior to ±2009, they were a nightmare. Uber is a massive improvement.
sadly uber has declined quite a bit since- but it was a good kick in the butt to the taxi industries to step up their game.
Or in San Francisco, the cab would ask you where you are going. And if you said Inner Sunset, not even Outer Sunset, they would just leave.
In NYC though, you just walk out of your building, stick your hand out, and the cab would be there.
It is 1000% better in most places.
I've travelled in Europe and had good service just googling the number of a local taxi firm, and speaking to them.
I used Uber once, and they decided not to take my fare; they never showed up.
Anecdotally, I have taken a trip from London to Heathrow airport 2 times, one time with a taxi cab and the other time with Uber. Uber cost two times less, and the service was on the same level or better.
This ironically shows how size matters a lot. Be it state investment or huge VC, more cash, more power and more centralization means better service (if the megamoney was spent well).
I agree that Uber's way of underpaying drivers is not scalable (basic mathematics) and price hikes should happen to make the numbers work out. However the service level now people expect is very much innovative.
What "real reason" is there for anything to "exist" and what do those terms mean? There's no real reason for corn in a can to exist, you have corn on the cob!
It's a subsidy whenever any product was developed based on parts of a project the people in a state created, because the state was paying them. Well, then I guess I exist because of state subsidies. The state reimburses and sets standards for medical procedures and I had open heart surgery at 2. Hell, is Steve Jobs' Apple the result of state subsidy because he formed a company that's state sponsored, when he should have struck out on his own to be a fingerpaint artist from his own materials and talent?
These arguments feel like ridiculously cherry picked characterizations that have no weight and contribute nothing.
Anything you do can be done better when multiple people can collaborate on it and get accurate instrumentation about it. And anything can be done cheaper when it can be automated, and that's what apps provide too.
There isn't much money in such in the 'hard engineering innovation' domains you mention.
However, anybody looking at things like Space industry or the battery industry and claims that there are no start ups is crazy. There are large numbers of start ups some that get 100s of millions or billions of investment to solve complex problems.
The amount of new space launchers is frankly absurd. There are not to few, but to objectively to many startups trying to do the same thing.
I have no idea where the line is though, and its hard to say what might've happened in a better "market".
This is obviously not true.
Cold War was a huge economic engine for state subsided private companies that not only produced defense material but also that innovation spread into commercial products, cars, electronics, telecommunication etc.
Today that process within some areas (not tanks) almost the reverse, Defense departments now buy off the shelves components instead of custom made.
With that said I think that Chomsky oversimplifies when calling the todays IT sector for parasitic, you have that perspective when you think the state should govern the economy & innovation from a state perspective. I think a better and more pragmatic view is is should be a symbiosis between two different interest.
Good Universities are better at actual innovation and inventing novel technologies, but they usually have little incentive to productize things. Or to put it in different terms, the product is the journal or conference proceeding article, because that's what satisfies the people who write grants.
The grants come mostly from government, which isn't good at innovation or productization, but they know how to pay other people to do those things for them. It's a weird system: government taxes employees and (to a lesser degree) businesses, and then uses that money to pay University researchers to invent things that are eventually used in the private sector as the foundation of some new commercial product.
Is there a more efficient way to do this? Probably. We could have more government funding to Universities directly for productization of their research, or give out a lot of grants to individual people who are just maintaining open source projects or making/maintaining something similar that many people benefit from but the value would be lost if one were to try to make money off of it. We could also give taxpayers some say in how the basic research portion of their taxes is spent.
There is definitely a lot of missed opportunity in not supporting some open source projects that provide general public benefit.
Some of those products would compete with parts of the services Google and co offer.
That's probably the "problem".
> A classic pattern in technology economics, identified by Joel Spolsky, is layers of the stack attempting to become monopolies while turning other layers into perfectly-competitive markets which are commoditized, in order to harvest most of the consumer surplus.
regulatory capture is one way to achieve this goal in your sector.
> the United States' economic success is a result of public and state funded investments in innovation and technology, rather than a result of the small state, free market doctrine that often receives credit for the country's strong economy.
I really liked this Freakonomics episode[2] if you're more the podcast kind of person.
Pardon me, where do you see that? All i see in SV is a racket of state-protected monopolies. Good luck protecting their IP or their hard cash in a truly open market.
You're conflating two different things, one of which is good and the other bad.
Also, does anyone remember how boring and useless the web was before mobile devices opened the flood gates? We didn't even have proper mobs then, and walls of text wherever you turned.
He is pointing out that things like GPS, the Internet, industrialized-agriculture, display-tech, aviation, etc. are shown as successes of capitalism in the west when their origins lie heavily in the state sector.
It would therefore be hypocritical for us to tell some third world / developing country to adopt our ways of "free trade" and "free market capitalism" when we don't really practice it ourselves and neither does any other "successful" country.
The developed far-east is a glaring example of the same.
They relied on protecting domestic industry through tariffs and suppressing wages relative to productivity to sell into export markets, driving up the savings rate to facilitate further investment. They do this either through political repression of labour unions (China) or through strategic undervaluation of the currency.
South Korea and Taiwan were military dictatorships when they began this process. It's completely unremarkable that a nation that doesn't have democracy achieved middle income status, because the purpose of democracy isn't achieving economic development. Although the first nation to implement this style of economic management was a democracy, the US did so in the late 1700s after Hamilton recommended it.
The problem with this growth model is that it relies on someone somewhere to absorb the production. If not for the free market ideologues in the export markets advocating for lowering trade barriers, these growth miracles probably wouldn't have happened to the same degree. The US isn't advocating free trade out of misguided benevolence, equal access to markets is what it considers 'fair'.
As I said they were investment led growth miracles, but I think that people who dismiss the importance of exports to these countries are extremely misguided. Exploiting excess labour for labour intensive industries e.g. garment manufacture in export markets they gained much needed income to import raw materials needed for heavy industry. By suppressing wages and thus consumption, they made savings available to invest into capital intensive industry which then came to dominate their exports.
Once they had developed sufficiently the investment led growth becomes self-sustaining. If your exports are growing at 20% p.a. as Japan's were in the 60s and 70s, investment in infrastructure becomes justified particularly when the country is underinvested after a war. But the shift to consumption led growth is difficult to achieve, it's why you see debt to GDP climb after the period of initial growth as malinvestment becomes common. Consumption's share of GDP in South Korea is still extremely low, Japan's only began to climb after complete collapse in 1990, China's is the lowest of all at 55%.
It just happens that that was developed at CERN another inter-government funded research institution.
There’s a pattern here.
Edit: sorry, the ussr commented was someone else.
It is true that it does exist some limitations on what kind of commercial interest the government can execute. Some by law (in Sweden for what a Kommun (city) can do, can't own property abroad), and some by agreement with other states (e.g. EU).
Some of these limitations are necessary because there is a huge risk that politicians start gambling with tax payer money on high risk enterprises, we have many examples of that is Sweden, especially on the Kommun (city) level.
That is usually why subsidies are preferred, because you transfer a large part of the risk to the private sector, the drawback is of course the the government doesn't share the earnings of that private company if successful, however because the government has the right to tax it does but indirectly.
In Sweden the government subsidies broadband expansion but it is private companies that does the actual digging and then other private companies runs the broadband connection. The private consumer still needs to pay some sum to connect to the house, but heavily subsidized, that way you avoid unnecessary connections.
There does exist a risk that state subsidies can create corruption, tax payers buys unwanted things from private companies, that is why it is important with a structured and transparent process regarding subsidies.
However there is limitation on subsidies by agreement, with the membership in EU Sweden can no loger subsidy sectors to the same extent it could do previously and that is bad.
I don't think Sweden's large broadband expansion would be possible if it was state run only. It would be like the old Televerket (the previously state run telecommunication company), slow, sleepy and not interested in solving problems for the consumer. But with the government injecting capital to the private sector the broadband expansion is mostly succesful.
Now, on to the status quo. In what follows, I'm going to consider broadband only. Dialup exists, but isn't particularly interesting because, well... it sucks.
Among the problems the US has with broadband is that only 25 million out of around 330 million of us actually access the internet at broadband (25Mbps+) speeds [1]. The reasons for this are up for debate, but the most logical explanations would seem to be lack of access, lack of affordability, or a combination of both.
Another problem we have is a lack of competition among broadband providers. According to [2], 83 million Americans only have a single broadband internet provider available to them. If that's, say, Comcast, a company not well known for its stellar customer service, to put it mildly [3], then your choice amounts to either deal with the devil and take whatever they offer you, or just don't have broadband.
So, how did we get here? I'm not one to just reflexively say "blame the gubmint," but, in this case, it's true. There was competition in the cable industry in the mid 1990's, until the Telecommunications Act of 1996, an astoundingly complex piece of legislation, scrambled the regulatory environment that was present, ultimately allowing all the regional cable providers that existed before then to consolidate and form the giants we have today: AT&T, Comcast, Charter, and the rest.
Well, great! There are lots of cable companies, so that means there's lots of competition, right? Wrong. These companies co-evolved together and created a situation where each one has lots of local monopolies [4], leading to the situation today, where, paradoxically, there are quite a few cable companies, but consumers frequently only have one to choose from.
And, so, we reach the end of our journey, in which the country that literally invented the internet has extremely slow and expensive broadband internet [5].
In a broader sense, one may ask "how did we get into such a situation?" And, if I may speculate a bit, I believe it's because we have not regarded broadband internet access as a utility.
Before I get into that, I want to quickly mention that since starting a broadband ISP involves huge capital costs in the form of last mile infrastructure [6] (e.g. if Comcast and AT&T want to compete in a certain area, both need to lay down their own cable infrastructure to do so, because neither one wants to share), and significant economies of scale. This leads to them being what's called "natural monopolies." And, surprise, surprise, this is exactly what I mentioned happened!
Now, monopolies can tend to be bad for consumers, but, in the case of natural monopolies, competition is either impractically expensive or fairly impossible. For instance, you don't want more than 1 municipal water company, because then you need to have twice as much water pipe and twice as much purification and pumping infrastructure, and that's just plain wasteful. For something like cable/telecom, it's more that duplicating that last mile is just silly, and would generally be ridiculously expensive, so, the companies just don't do it.
So, you're left with this monopoly sitting here and your consumer over there in need of some kind of protection from it, lest otherwise the water company raise the price of water to $1000/l or something, because it's decided that would be the most profitable thing to do.
There are really only a couple things you can do here:
* Regulate the monopoly by, for instance, limiting price increases and mandating a certain quality of service, minimum coverage areas, that they sell access to their networks for a reasonable cost, or whatever.
* Or, take it over and make it a municipal utility, thus eliminating the profit motive to raise prices to ridiculous levels.
But, we've done none of these things. So, I'm stuck with Comcast, and life sucks. THE END.
Now, tell me, do you think we might be able to improve upon this system just a little bit, or no? ;-)
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[0]: Yes, toll roads and bridges exist, but those are generally either run by private companies, or the tolls go toward paying off bond issues taken out to fund them, not to make a profit.
[1]: https://www.allconnect.com/blog/americas-broadband-divide-re...
[2]: https://ilsr.org/report-most-americans-have-no-real-choice-i...
[3]: https://en.wikipedia.org/wiki/Criticism_of_Comcast#Low_custo...
[4]: https://www.npr.org/transcripts/899472976
[5]: https://www.broadbandsearch.net/blog/internet-costs-compared...
[6]: I'm kinda ignoring satellite and cellular for now, so bear with me.
[7]: https://www.investopedia.com/terms/n/natural_monopoly.asp
For the same reason that electricity isn't free: it's a scarce resource that needs to be allocated in a sensible way. And yes, you are of course right that Internet access is a natural monopoly, but if you look at which countries are really good in this area (like Sweden, Finland or South Korea), it is never a state monopoly, but well-regulated private companies.
France's Minitel?
> Wouldn't that be better than the status quo?
It wasn't.
You see, your argument is of very little use - while it’s still not shown that funding wasn’t the most important task. AFAIK the processes by which grants have been provided for military research have been highly competitive, i.e. market-based.
This is called shiny object capitalism. Look at who produces novel therapies and drugs.
The success of the 21st was built on piles and piles of cold war government handouts
https://podcasts.google.com/feed/aHR0cHM6Ly9jaXRhdGlvbnNuZWV...
Innivation is fueled by money. Innovation is risky. Private investors need a return on their investment. Public doesn't need a direct financial return.
Hence innovation thrives wherever there is money with little strings attached. For smaller sums, private investors can do that (think about an accelerator that gives 1 million to 10 startups). For bigger sums, you need a space race against a foreign power funded by the gov.
On the left, Norman Finkelstein, a former protegee, noted that Chomsky became known for an approach to politics and history that was very empirical at a time when many communists were very dogmatic and missed certain predictions about Maoist China. In my opinion however, Chomsky is also dogmatically anti-Marxist-Leninist to the point of caricature. I suspect that is how he retains his position in high society.
https://www.goodreads.com/book/show/12618.Chomsky_On_Anarchi...
He's best known as a public commentator and political activist. As a public contrarian to the current world system. He's not best known for Chomsky grammar classes on tv